Nifty opened on a marginally positive note but there was a drop of about 1.5 million in OI of Nifty futures that kept the upside capped. Until here, VIX kept its head low at about 30.3 levels. With some apparent calmness in the 5010-5030 zone there was a sudden sell-off and VIX yet again spooked off to 33+ and OI in Nifty futures surged to 30.7 million. Banknifty is well below the critical level of 9500. On the downside for Nifty, 4911 was not breached but the weakness in markets is apparent. For the last 5 trading sessions now, there is hardly any increase in OI on the upside but huge participation on the downside for Nifty futures.
Today was the 3rd consecutive close below 5092 levels and safe to assume that this will hold until Thursday EOD. Unless we get a close above 5092, interim rises will be used to short. A close below 4880 will seal off the hopes of any further upside. The furious drop from 5169 to 4911 within 4 trading sessions had kept the possibility of seeing above 5k levels once. We have seen it today and may possibly see it once more this week. A close below 4880 will ensure a rapid fire retest of 4800 levels and possibly 4690-4720 levels as well.
Upside is capped at 5225 on Nifty spot. Without support from Banknifty, Reliance and LnT, too much upside won't come through on Nifty. Safe to take short positions on Nifty with hedges. Given the way the markets have been moving, I would not recommend retail traders to participate on the upside with too much trading margin at stake. It is better to wait for a reasonably good rise if it comes through or a close below critical level and enjoy the advantage of shorts.
The remaining part on how we should interpret the moves today and how we should anticipate the unfurling of further price actions can be found on Raghuji's EW Counts section. Critical levels remain unchanged from last week. We are near certain to retest 4800 levels but one should not rush to buy Puts and must ideally allocate only 20% to 30% of trading margins for options.
Today was the 3rd consecutive close below 5092 levels and safe to assume that this will hold until Thursday EOD. Unless we get a close above 5092, interim rises will be used to short. A close below 4880 will seal off the hopes of any further upside. The furious drop from 5169 to 4911 within 4 trading sessions had kept the possibility of seeing above 5k levels once. We have seen it today and may possibly see it once more this week. A close below 4880 will ensure a rapid fire retest of 4800 levels and possibly 4690-4720 levels as well.
Upside is capped at 5225 on Nifty spot. Without support from Banknifty, Reliance and LnT, too much upside won't come through on Nifty. Safe to take short positions on Nifty with hedges. Given the way the markets have been moving, I would not recommend retail traders to participate on the upside with too much trading margin at stake. It is better to wait for a reasonably good rise if it comes through or a close below critical level and enjoy the advantage of shorts.
The remaining part on how we should interpret the moves today and how we should anticipate the unfurling of further price actions can be found on Raghuji's EW Counts section. Critical levels remain unchanged from last week. We are near certain to retest 4800 levels but one should not rush to buy Puts and must ideally allocate only 20% to 30% of trading margins for options.
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